News: The government recently formed an 18-member panel, led by NITI Aayog’s Ramesh Chand, to revise the Wholesale Price Index (WPI) base year and plan a shift to the Producer Price Index (PPI). Ramesh Chand Panel
About Ramesh Chand Panel
- The panel was set up to update the base year of the Wholesale Price Index (WPI) from 2011-12 to 2022-23.
- Its key responsibilities include:
- Proposing a revised commodity basket for both the WPI and Producer Price Index (PPI) based on the 2022-23 base year.
- Reviewing the existing price collection system and suggesting enhancements.
- Determining the computational methodology for the WPI and PPI.
- The panel comprises economists from the government, rating agencies, asset management firms, banks, and representatives from the government and the Reserve Bank of India.
About Wholesale Price Index (WPI)
- Released by: The Office of Economic Advisor, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry
- WPI measures changes in the prices of goods sold and traded in bulk at the wholesale level.
- It doesn’t reflect inflation for the common public, as they purchase products at retail, not wholesale prices.
- WPI excludes the service sector, which covers about 55% of GDP.
- Base Year: Currently 2011-12, being revised to 2022-23.
- Number of Items: Covers 697 items, including 117 primary goods, 16 fuel and power items, and 564 manufactured products.
About Producer Price Index (PPI)
- PPI measures wholesale prices from the point of view of producers of goods and services by tracking prices at different stages of production.
- PPI differs from WPI as it tracks the average change in prices received by producers and excludes indirect taxes.
- It focuses on inflation from the perspective of industries and businesses, measuring price changes at production stages before final goods and services reach consumers.
- Unlike WPI, which only includes goods, PPI also covers services.
- PPI has replaced WPI in most countries as it aligns with the internationally accepted System of National Accounts (SNA) for measuring economic activity.
